And re-sold it to consumers for billions more than it paid, according to Toni Sacconaghi
The only difference between a 16 GB iPhone 4S and the 32 GB model is 16 GB of NAND flash memory, for which Apple (AAPL) charges customers $100.
But according to Bernstein Research’s Toni Sacconaghi, Apple buys that memory for a heavily discounted price of $0.67 per gigabyte, or a total $10.72.
That’s a pretty sweet mark-up. And an extraordinarily profitable strategy, Sacconaghi writes in a note to clients entitled “Apple: The NAND Gravy Train.”
It’s such a sweet deal, he can’t understand why Apple’s competitors aren’t doing the same. I quote:
By comparison, Google (GOOG) Android phones such as the Samsung Galaxy S2 come with a single pre-specified amount of internal storage (32GB in this case) and offer users the option to add an external SD card. Good for users, not so good for Samsung’s bottom line.
Below: One of Sacconaghi’s spreadsheets.